Top Ten Tips for Buy To Let!
1. Choose the Right Property
Location, location, location...
2. Choose the Right Mortgage
Check the amount you can afford. Remember that with the National Credit Act of South Africa it's no longer 30% of your income that's taken into account on your qualification but what you can afford after your expenses have been deducted at the end of the month.
3. Work out Costs and Income
Work out how much your monthly mortgage repayments will be and whether your rental income will exceed this.
Remeber to look and see whether you can afford your mortgage repayments if the interest rate increases again (most likely to go up another 0.5% in the next 6 months). Another thing to consider is that should your tenant dissapear, can you afford to pay the mortgage costs for the next 3 months?
4. Buy To Let 'Hidden Costs'
Don't forget your bond costs. There's registration costs, transfer fees, attorney fees, Stamp Duty and posts and petties. Check out the Bond Costs tab at the top of this page.
5. Choose a Professional Rental Agent
If you choose your rental agent wisely, you may be lucky enough to find someone who, manages your tenant for you. This includes collecting rentals arranging agreements etc. This is not required as they may charge an additional monthly fee but may come in handy if your buy to let appartment is not within driving distance.
6. Ensure you have the Right Insurance
Check with your insurance broker what you need to cover you.
We offer you low premiums and a cash OUTbonus.
7. Sort out your Taxes
You have to pay income tax on any rental income you receive, although you can deduct some expenses.
8. Get a Fully Flexible Mortgage
Make sure that your mortgage originators choose the correct option for you. Buy-To-Let options are available out there.
9. View Buy To Let as a Long-Term Investment
Buy To Let is a long term return. Expect this return to peak at around 5 years in. Don't expect to make a quick profit on rental income.
10. GOLDEN RULE
If you have a extra R500 a month, throw it into your bond account. Where else are you going to get 13% interest on your money. DAILY...